O.C. Couple Pull Trash on Telemarketing Firm : Inquiry: Newport duo dug through garbage bins to compile information. Findings led to the probe of Broadcast Holdings.
Bonnie Morrison describes herself as a homemaker and a churchgoer.
She and husband Mitchell, a financial marketing executive, live with their two children in a rambling ranch-style home in the Dover Shores section of Newport Beach, where houses routinely sell for $400,000.
In short, Bonnie Morrison is not a person one would expect to be pawing through garbage bins at night. But for three weeks last spring, that’s just what she did. Those nocturnal exploits capped more than a year of private detective work by the couple and resulted in an ongoing state and local investigation of a suspected telemarketing boiler room operation that raised more than $5 million from investors.
The company, Broadcast Holdings Inc., is owned by a man with a previous state securities fraud conviction. Affiliated with it was an Irvine lawyer who has been involved in increasingly bitter litigation with the Morrisons--former business and social partners--for several years.
The Morrisons weren’t among the investors in Broadcast Holdings. Their quest stemmed from their business dispute with attorney Arthur A. Graves III. While trying to dig up dirt on Graves, the couple stumbled onto the telemarketing operation.
Law enforcement officials freely admit that if the Morrisons hadn’t become citizen detectives--and especially if Bonnie Morrison, 39, hadn’t hitched her 5-foot-2 frame over the edge of a garbage bin a dozen times in March to early April--there would be no investigation of Broadcast Holdings and its principals.
In an era when budget cuts and escalating violence have made white-collar crime investigations a luxury in most police agencies, law enforcement officials say the do-it-yourself approach is often the only way an aggrieved party can get a case opened.
“There are so many of these cases out there, we could never get to all of them” without citizens’ help, said Barbara Babcock, an agent with the FBI’s securities fraud unit in Long Beach.
Bonnie Morrison, though thrilled with the work that Newport Beach Police Sgt. Albert Fisher has done on the case subsequently, puts it a bit more harshly.
“The system was allowing us to be raped” in the dispute with Graves, she said. “Everyone we approached was reluctant to do anything. We sent information to the state attorney general, the Federal Communications Commission, the (California) Department of Corporations, the FBI. . . . They didn’t deny that something bad was going on, but they all said they didn’t have the manpower or were busy with other, bigger cases.”
Graves could not be reached for comment. Through a public relations agent, he denied any wrongdoing and said that the Morrisons are in a personal vendetta because of a business dispute with him.
The Morrisons said they discovered as they investigated Graves’ business dealings that he had ties to Broadcast Holdings. But they didn’t pursue that link immediately. On their way home from church one Sunday in March, Bonnie Morrison said she happened to glance at a brick office building on Red Hill Avenue in Costa Mesa and spotted a sign for the offices of Broadcast Holdings.
“Something just told me, ' Look in the trash,’ ” she said.
The bag of paperwork and lunch leftovers that she pulled from the bin that afternoon “told me right away that something was wrong,” Bonnie Morrison said.
One thing Bonnie Morrison found that day was a telemarketing script that Broadcast Holdings gave its salespeople. A notation on one page, she recalls, cautioned, “Never let the customer take control of the conversation.”
After that, she began making midnight visits to the garbage bin on Red Hill Avenue. “We had to go late at night,” she said, “so we’d get there after the janitors had done their work and dumped the trash.”
Her husband or a neighbor would always accompany her and keep watch in the parking lot, she said. She did the digging herself, she said, because her 42-year-old husband, a muscular six-footer, “has had seven knee surgeries and has a bad back.” Besides, she said, “he’s too big to get into a Dumpster. I’m more agile.”
Sgt. Fisher said he met Morrison one morning in March when she walked into his office with a handful of Broadcast Holdings paperwork. Some of it had been pieced together by Morrison and obviously had been run through an office shredder previously, he said.
“What she did was absolutely essential to this case,” said Fisher, now a patrol supervisor with the Newport Beach Police Department.
Broadcast Holdings was involved in selling investors--many of them retired--a stake in what its sales agents represented as a series of wireless cable-TV networks. Wireless systems work like regular cable but are less expensive to install because the operator doesn’t have to string wires to each customer’s house.
There are legitimate wireless cable operators, but state and local law enforcement officials say that the field has become a fertile one for scamsters who sell shares in nonexistent systems based on promises of huge profits.
In May, bolstered by opinions from fraud specialists in the state Department of Commerce that Broadcast Holdings was involved in illegal activity, Fisher used the information Bonnie Morrison had culled from the trash to get a search warrant. On May 25, police raided Broadcast Holdings’ Costa Mesa office and seized records of what officials maintain was a boiler room operation that was raising millions of dollars peddling illegal, unregistered investments.
Broadcast Holdings has since moved to Laguna Hills. Its owner, Greg Moeller, could not be reached for comment.
Fisher said Moeller is “well known” to the Newport Beach police and that he has a previous securities fraud conviction in California.
The case grew out of Morrison’s disenchantment with the way that attorney Graves, who has offices in Irvine and Century City, did business. A lengthy list of allegations against Graves has been forwarded by Morrison to the State Bar of California. A bar official said the association cannot comment unless a complaint results in formal charges against a member by the Bar’s committee on discipline. Graves has not been charged, she said.
Morrison, however, said bar officials have told him they are investigating his complaints and are also looking at Graves’ involvement with Broadcast Holdings.
Through the public relations spokesman, Graves issued a statement Friday acknowledging that he is general managing partner of a company called Broadcast Acquisitions, which has bought stakes in three prospective wireless cable systems from Moeller’s company. Graves’ statement said that he has assisted Broadcast Associates’ efforts to sell partnership interests but has no affiliation with Moeller or his company, Broadcast Holdings.
“I have never participated in any illegal activities,” the statement said. The Morrisons, it continued, have made “false statements” and are “trying to destroy my reputation.”
The Morrisons’ differences with Graves date to 1991, when Mitchell Morrison set up shop as a private financial consultant. He met Graves through a business acquaintance, he said, and was soon doing consulting work for the attorney, whose practice included helping private businesses find investment capital.
By the end of 1991, however, Morrison no longer was comfortable working with Graves, he said, and sought to end their relationship. Early in 1992, Graves filed a lawsuit against Morrison alleging that the consultant owed him $14,000. He won a $10,000 judgment and later filed a second suit seeking to attach a business bank account in which Morrison had funds.
That, the Morrisons said, is what set them off. “We tried to walk away, and he wouldn’t let us. He became vindictive,” Bonnie Morrison said.
The couple began investigating Graves’ business activities and compiled a thick dossier that resulted in their complaint to the bar association.
The Morrisons said that their two-year struggle with Graves has drained their savings.
In February this year, Graves filed a libel and slander lawsuit against the couple. Since then the Morrisons have filed for personal bankruptcy, which in effect canceled the $10,000 judgment that they owed to Graves.
“This whole thing has been a nightmare,’ Bonnie Morrison said, “and it could have been over a long time ago if people had listened when we first started complaining.”
Police agencies do the best they can with limited resources to devote to complicated civil fraud cases, Fisher said. But he adds, in an indirect acknowledgment of the inadequacy of the system, “If we had more Mrs. Morrisons, we’d have a lot more prosecutions.”